Europe's Luxury Sector In Unfamiliar Territory As Investors Cool Off.

Byline: WWD Staff

Europe's Luxury Sector In Unfamiliar Territory As Investors Cool Off

PARIS

Europe's high-flying luxury sector is losing altitude as pessimism rises among investors.

Shares of PPR, Burberry and other high-end players fell Thursday as Deutsche Bank and Goldman Sachs lowered profit estimates and ratings.

In a report, Deutsche Bank analyst Jamie Isenwater forecast "a continued slowdown in global luxury demand in 2009," pegging organic growth for next year at 6 percent versus 7.1 percent for 2008, and cutting 2009 earnings-per-share forecasts by 8 percent on average.

"While there are obvious attractions to the sector...visibility remains low and consensus forecasts too high," he wrote. "The industry faces considerable risks over the next years."

The investment firm downgraded Swatch and Luxottica, leaving no "buy" recommendations in the sector.

Also on Thursday, Goldman Sachs issued a report on European retail and downgraded seven stocks, including Burberry, PPR and Safilo. Compagnie FinanciA[umlaut]re Richemont, Essilor and Puma are on its "conviction buy" list.

Rising inflation, declining purchasing power and weak consumer confidence …